The government is planning to introduce floating exchange rate of the US dollar against Taka amid recent volatility in greenback price, Finance Minister A H M Mustafa Kamal said on Wednesday.
"We will go for market-based exchange rate today or tomorrow," the minister said, pointing to exchange rate of dollar, after a virtual meeting of the Cabinet Committee on Government Procurement.
The government is planning to handle foreign currencies like the other advanced economies - in the same way they deal currencies in their local and international markets, he added.
Usually, foreign currency rates are fixed by the central bank. However, the Bangladesh Foreign Exchange Dealers Association (BAFEDA) and the Association of Bankers' Bangladesh (ABB) on Sunday set new rate of US dollar for remittance at Tk 108 and for export proceeds at Tk 99.
The new rates are much higher than the central bank-fixed inter-bank dollar exchange rate, Tk 96, for opening letter of credit (LC) for importing goods.
The central bank on Tuesday uploaded the exchange rate of dollar, as set by the BAFEDA, on its website.
"You can term the new rates as the BAFEDA rates," Bangladesh Bank's (BB) spokesperson Sirajul Islam told the FE on Wednesday.
Following the new rates, introduced by BAFEDA on Tuesday, the buying and selling rates stood between Tk 102.37 and Tk 106.90.
Meanwhile, asked if the government has any plan to raise deposit and lending rates of the banks from the existing 6.0 per cent and 9.0 per cent to help lower inflationary pressure, the minister answered negative.
"I think the current rates are okay," he said, adding containing inflation by raising or lowering interest rates in the countries like Bangladesh is "tough".
Mr Kamal opined that there are two ways to contain inflation - by applying fiscal and monetary measures - which the central bank usually does.
On constant falling of foreign exchange (forex) reserve, which now stands at US$37 billion against $48 billion in August last year, he noted that Bangladesh is still in a better position now in terms of forex reserve.
"Our export is rising and import is dropping, while remittance is rising very speedily."
The minister also said presently $2.0 billion is coming as remittance every month.
He was hopeful that the country's forex reserve would reach $48 billion, if the remittance flow continues.
Replying to another question, Mr Kamal said the issue of importing fuel oil from Russia is yet to be finalised.
Bangladesh would have to make the payment against fuel oil import through currency swap, if Russia would accept to do so.
Contacted, BB former governor Dr. Salehuddin Ahmed told the FE on Wednesday that the floating exchange rate - introduced back in 2012 - was "managed one", and the central bank intervened when needed.
"A true floating exchange rate means the central bank loosens its grip and lets the rate to be set automatically."
Mr Ahmed further said the BB has kept the exchange rate static for a long period instead of raising it gradually, and so, the rate has now jumped notably.
"What the central bank can do now is to keep only one buying and one selling rate with a minimum difference, and the rest should be market-based," he suggested.
syful-islam@outlook.com
